Castellum AI reports in their 2025 Sanctions Year In Review that global authorities significantly increased their focus on digital assets and Iranian networks during the previous twelve months. Financial institutions faced a complex regulatory environment characterized by sharp shifts in enforcement priorities and a growing divergence between major global powers. The United States Office of Foreign Assets Control issued 2,223 new designations while the United Nations reintroduced nuclear proliferation sanctions targeting Tehran. Compliance teams now operate in a landscape where traditional jurisdictional boundaries are blurred by the rapid evolution of cross-border financial technology.

Global Sanctions Landscape

The international regulatory community witnessed a profound transformation in how economic penalties are applied to state and non-state actors. While the United States remains the primary driver of global enforcement actions, the pace of new designations from Washington decreased by thirty percent compared to the prior calendar year. This reduction occurred alongside a strategic pivot toward thematic priorities such as narcotics trafficking, organized crime, and the disruption of international terrorism. Meanwhile, other jurisdictions, including Canada, Switzerland, and the European Union, maintained or accelerated their own designation processes, creating a multi-layered compliance burden for global banks. The United Kingdom also demonstrated independent agency by targeting specific political figures in Latin America, illustrating the necessity for financial firms to monitor multiple lists simultaneously. This year was particularly notable for the United Nations, which added over one hundred new entries to its consolidated list after several years of relatively low activity. This surge was primarily driven by the automatic reimposition of penalties following the conclusion of previous nuclear agreements.

Data from the report suggests that the global total of active sanctions has reached unprecedented levels, forcing a rethink of how screening technology functions. Switzerland and Canada showed the most aggressive growth in their domestic lists, often aligning with European Union priorities, while the United States recalibrated its focus under new executive leadership. The divergence between the Atlantic powers has created specific challenges for firms with operations in both regions, as some individuals or entities might be sanctioned in Brussels but not in Washington, or vice versa. For instance, the European Union implemented measures against specific individuals for activities related to the destabilization of Eastern Europe that were not mirrored by other authorities. Conversely, the United States took the controversial step of targeting members of the International Criminal Court, a move that remained unshared by its traditional allies in France and Canada. These discrepancies require sophisticated legal analysis and localized risk assessments to ensure that a firm does not inadvertently violate the laws of one jurisdiction while attempting to comply with those of another.

Evolution of Digital Asset Enforcement

The integration of cryptocurrency into the broader geopolitical framework reached a critical tipping point this year. Digital assets are no longer viewed as a niche area of concern but are now recognized as a primary vehicle for large-scale sanctions evasion and the financing of illicit activities. Regulators have responded by aggressively targeting specific blockchain addresses, with the total number of sanctioned crypto identifiers surpassing one thousand for the first time. The European Union, France, and Switzerland joined the United States in issuing their first specific designations for digital wallets, signaling a unified international front against the use of decentralized finance to bypass traditional banking controls. This shift indicates that any financial institution facilitating crypto on ramps or off ramps must now treat these transactions with the same level of scrutiny as traditional wire transfers. The complexity of this task is compounded by the fact that many sanctioned addresses are now moving away from transparent blockchains like Bitcoin and Ethereum.

Approximately thirty percent of the newly sanctioned digital addresses are located on alternative networks such as Tron and Monero. These ecosystems are often favored by bad actors due to their higher levels of anonymity or lower transaction costs, presenting a moving target for compliance officers. The rise of privacy coins and secondary layer protocols means that basic screening against well-known Bitcoin addresses is no longer sufficient to mitigate risk. Furthermore, the introduction of the GENIUS Act in the United States has brought stablecoins into the formal regulatory fold. This legislation requires stablecoin issuers to maintain specific reserves and strictly adhere to anti-money laundering protocols, effectively treating them as traditional payment instruments. For banks and fintech companies, this means that every counterparty involved in a stablecoin transaction must be vetted with the same rigor as a correspondent banking partner. The focus has moved from merely identifying sanctioned individuals to mapping out the entire technological infrastructure that enables their financial survival.

Disruption of Iranian Facilitation Networks

Iran emerged as the central focus of global sanctions activity this year, with a massive increase in the volume of designations across all major jurisdictions. The United States alone issued over eight hundred new Iran-related sanctions, representing a nearly seventeenfold increase from the previous year. A defining characteristic of this campaign is the emphasis on enablement networks located outside of Iranian territory. More than half of the parties sanctioned in connection with Tehran are actually situated in third countries such as China, India, and the United Arab Emirates. This strategy is designed to sever the logistical and financial arteries that allow the Iranian regime to procure industrial inputs, sell energy products, and fund its various proxy groups across the Middle East. By targeting the foreign intermediaries, regulators are attempting to make the cost of doing business with Iran prohibitively high for international shipping firms and trading companies.

The United Arab Emirates and China have been identified as primary hubs for this activity, with hundreds of designations targeting front companies and procurement agents. These entities often use complex corporate structures and frequent vessel reflagging to obscure the true origin and destination of goods. Financial institutions must now perform deep due diligence on trade finance transactions involving these high-risk regions, looking beyond the immediate customer to the underlying beneficial owners and maritime routes. The end of the Joint Comprehensive Plan of Action led to the return of snapback sanctions, which primarily target weapons development and nuclear proliferation. This has created a maximalist environment where almost any significant commercial interaction with Iranian interests carries a high risk of triggering secondary sanctions. Compliance teams are forced to monitor not just the direct participants in a transaction but the entire supply chain, including the agents who facilitate payments and the maritime service providers who manage the physical movement of cargo.

Strategic Compliance Mandates for the Future

The findings from the Castellum AI report indicate that the era of simple list matching is over for modern financial institutions. The current environment demands a proactive, intelligence-led approach to risk management that can adapt to rapid changes in government policy and technological innovation. Organizations must invest in advanced data analytics to identify the patterns of behavior associated with enablement networks, particularly those operating in the digital asset space or in transshipment hubs. The growing use of personal liability for compliance officers further raises the stakes, as regulators seek to hold individuals accountable for systemic failures in oversight. This shift toward individual responsibility means that internal policies must be robust, transparent, and consistently applied across all global branches. Training programs need to be updated to cover the nuances of stablecoin regulation and the specific red flags associated with Iranian procurement strategies in Asia and the Middle East.

Looking ahead, the divergence between the United States and other major economies is likely to persist, creating a permanent state of regulatory friction. Firms must develop the capability to manage conflicting legal requirements and make risk-based decisions that protect their global reputation. The focus on thematic sanctions, such as those targeting human rights abuses or cybercrime, adds another layer of complexity, as these designations often rely on non-traditional data sources. To remain compliant, institutions should prioritize the integration of high-quality, real-time data into their screening engines and foster a culture of vigilance that extends from the front line to the boardroom. The ability to navigate these overlapping regimes will be the defining characteristic of successful financial service providers in the coming years. As the methods of evasion become more sophisticated, the regulatory response will only grow more intense, leaving no room for complacency in the fight against financial crime.

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Key Points

• Castellum AI reports that US sanctions designations decreased by 30 percent in 2025 as priorities shifted toward Iran and thematic crime.
• Global authorities sanctioned over 1,000 digital asset addresses, with 30 percent of new targets moving to opaque networks like Tron.
• More than 57 percent of Iran-related sanctions now target foreign intermediaries in hubs like China and the United Arab Emirates.
• The US introduced the GENIUS Act to regulate stablecoins under existing anti-money laundering and sanctions frameworks formally.

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Related Links

• Financial Action Task Force Guidance on Virtual Assets
• US Department of the Treasury Office of Foreign Assets Control
• United Nations Security Council Sanctions Committee
• European Union Sanctions Map and Regulations
• UK Office of Financial Sanctions Implementation

Other FinCrime Central Articles About Industry Reports

• Key Insights from the TRM Labs 2025 Global Crypto Report
• The EBA’s 2025 Final Report Shows Progress but Reveals Deep AML Gaps
• Tracfin’s Latest Report Exposes Hybrid Laundering Threats for 2025

Source: Castellum AI

You can find Castellum AI’s page in the FinCrime Central AML Solution Provider Directory here.

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